BT has thrown down the gauntlet to BSkyB by offering free live Premier League action to football fans for the first time.
The telecoms giant, which is muscling in on Sky's dominance of sport after winning a three-year deal to show 38 Premier League games a season, also cut its broadband prices for new customers.
New copper broadband customers will pay £10 per month and £15 for faster fibre optic internet. BT's offer of free top flight football to new and existing broadband customers sent shares in BSkyB sliding more than 7%.
It also plans to wrestle pubs from Sky with a sports package which it claims could be 78% cheaper than its rival.
BT chief executive Ian Livingston said: "UK sports fans have had a rough deal for too long. Many have been priced out of the market but we will change this by giving away BT Sport for free with our broadband. Sports fans are the winners today."
Sky responded by labelling it a "marketing gimmick" designed to halt its loss of broadband customers.
Analysts said Sky is likely to cut prices in response to BT's "gamble", but said a "mass exodus" is unlikely.
Double Champions League winners Owen Hargreaves and Steve McManaman and former England goalkeeper David James have also been signed up as football experts to its sports channels, which will be called BT Sport 1, BT Sport 2 and ESPN.
Commentators will include former England striker Michael Owen, Ian Darke and Darren Fletcher.